Lee has over 30 years of trading and investing experience. While he has been involved in many facets of the brokerage industry, his current areas of expertise include technical analysis, trading strategies, and trading software.

With over 20 years at Schwab, Kevin focuses on helping clients develop and hone their trading skills. The most gratifying part of his job is showing people how to filter through the noise of the market to better understand how their own emotions can affect their trading success.

Lou joined Schwab in 2006. His primary responsibility is to educate traders about the tools and services that Schwab provides. He conducts local seminars on educational topics, including risk management, technical analysis, profit taking strategies, options trading, and trading software.

Stock Market Report

LIZ ANN SONDERS: As most people know, I spend some time in the world of the media, whether it’s on the phone with print journalists or doing financial radio, financial media on television. And more often than not, they’re three- to five-minute segments, and it’s usually about current events, what’s going on in the market and the economy. And rarely am I given the opportunity in that forum to get down to the basics and talk about, arguably, what is much more important to investors than what the market did today, what we think it’s going to do next week, and it goes back to the tried and true disciplines around things like diversification and rebalancing. As most people know who read our work, since we put out our 2018 outlook and then we updated it mid-year, we have talked about the fact that we believe we are late in the cycle, and, as a result, I think disciplines around things like diversification and rebalancing are even more paramount now than they are in general. They’re always important.

And let me talk about some of the reasons why it makes sense, in particular, right now, and the way to think about the concept of rebalancing maybe in a little bit different a way than you might have before. I think most people understand the benefits of diversification. But, really, the point of being diversified across non-correlated assets is to smooth-out the ride, so that you’re less likely to make rash, panicky kind of decisions, either in or out. The purpose is not to generate the highest return, but to get above-average returns, but with much lower risk, which, again, helps to smooth the ride. Rebalancing comes into play, especially if you’re in more volatile markets, where you are trimming from asset classes that have outperformed, adding to asset classes that have underperformed. And what that does is it forces us to do exactly what we’re supposed to and we’ve been taught to do, which is buy low, sell high. Often, when we’re left to our own devices, we tend to do the complete opposite.

What rebalancing does, as well, is your portfolio tells you when it’s time to do something. You don’t have to worry about which bombastic analyst or strategist, me or anybody else, has the right call on any given day or any given moment. You don’t have to rely on your own intuition or instincts as to have we hit a market top, have we hit a market bottom. Your portfolio will tell you when it’s time to do something. And if you apply that discipline, especially if you have a diversified portfolio and you have multiple asset classes on which you can apply that rebalancing discipline, that’s the closet thing you’re going to get to a free lunch in this world of investing.

Important Disclosures

The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.

Diversification and rebalancing strategies do not ensure a profit and do not protect against losses in declining markets.

Please note that this content was created as of the specific date indicated and reflects the author’s views as of that date. It will be kept solely for historical purposes, and the author’s opinions may change, without notice, in reaction to shifting economic, market, business, and other conditions.

Data contained herein from third party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed. Supporting documentation for any claims or statistical information is available upon request.

Past performance is no guarantee of future results and the opinions presented cannot be viewed as an indicator of future performance.

Options carry a high level of risk and are not suitable for all investors. Certain requirements must be met to trade options through Schwab. Please read the options disclosure document titled "Characteristics and Risks of Standardized Options." Supporting documentation for any claims or statistical information is available upon request.

Multiple-leg options strategies will involve multiple commissions. Covered calls provide downside protection only to the extent of the premium received and limit upside potential to the strike price plus premium received. With long options, investors may lose 100% of funds invested.

Schwab does not recommend the use of technical analysis as a sole means of investment research.

Investors in ETFs should consider carefully information concerned in the prospectus, including investment objectives, risks, charges and expenses.

Futures trading offered and positions held through Charles Schwab Futures, Inc., a separate but affiliated company of Charles Schwab & Co., Inc. Both are subsidiaries of The Charles Schwab Corporation. Futures trading involves substantial risk and is not suitable for all investors. Please read Risk Disclosure Statement for Futures and Options.

The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. All expressions of opinion are subject to change without notice in reaction to shifting market conditions.

You can request a prospectus by calling 800-435-4000. Please read the prospectus carefully before investing. Investors in Closed-End Funds please note that since these securities are not continuously offered, there may be no prospectus available.

Investment returns will fluctuate and are subject to market volatility, so that an investor’s shares, when redeemed or sold, may be worth more or less than their original cost. Unlike mutual funds, shares of ETFs are not individually redeemable directly with the ETF. Shares are bought and sold at market price, which may be higher or lower than the net asset value (NAV).

International investments are subject to additional risks such as currency fluctuation, geopolitical risk and the potential for illiquid markets.
With a qualifying net deposit of $100,000, earn 500 commission-free online trades.

Offer valid for individuals who make a qualifying net deposit into a Charles Schwab & Co. Inc. ("Schwab") retail brokerage account within 45 days of enrollment in the offer. Net deposits are assets deposited into the enrolled account minus assets withdrawn from the account and transferred out of Schwab. Only assets new to Schwab qualify; assets transferred from affiliates other than Schwab Retirement Plan Services, Inc. and Schwab Retirement Plan Services Company are excluded. The trades will be credited to the enrolled account within approximately one week of confirmation of your qualifying net deposit. Trades apply only to base equity, exchange-traded fund (ETF), and options commissions and options per- contract fees up to 20 contracts per trade (standard per-contract fees apply for additional contracts). Foreign transaction, exchange, and regulatory fees still apply. Only trades placed through Schwab.com, Schwab trading platforms, and Schwab Wireless are eligible. Trades will expire 365 days after being credited to your account and will not be applied to previously executed trades. No credit will be given for unexecuted trades.

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